In this paper, we propose a novel scheme of reversible data hiding in encrypted image. By using the same encryption key to encrypt the pixels in each non-overlapping block of original image, the contents of original image can be effectively masked by the content owner. The data-hider can realize data embedding in the encrypted image by exploiting the continuity characteristic of the pixels in each encrypted block and using run-length coding. After receiving the encrypted image containing extra data, with the encryption key, the receiver can obtain a directly-decrypted image which is similar to the original image; with the data-hiding key, the receiver can extract the embedded data correctly; with both encryption and data-hiding keys, the receiver can extract extra data and recover original image. Experimental results demonstrate that the proposed scheme can not only increase the hiding capacity in encrypted image, but also recover the original image without error.